The Impact of Economic Reform on Macroeconomic Variables CASE Study of Ethiopia.pdf

1、This paper is an attempt to investigate the impact of economic Reforms on the economic issues in Ethiopia.Different economic Issues-parameters determining the effectiveness of economic reforms-are separately discussed to

2、 measure how far Ethiopia has benefited from the reform policy.A simple and comparative analysis of various economic indicators between the pre-reform and pest-reform,this study analyses the impact of the Ethiopian econo

3、mic reforms which took place in the early 1990s.Transitional Government of Ethiopia(TGE),which was formed in 1991,is a pioneer of the reform Policy.This policy came about to remedy the economic crises,such as weak econom

4、y,loss of productive capacity,food insecurity and macroeconomic imbalance and instability,which were carried forward by the predecessor,the Dreg Regime(1974-91).TGE initiated a broad spectrum of reform measures to addres

5、s both the immediate need of Impact of Economic Reforms on Economic Issues and economic recovery and reconstruction to restart its economy and free it from the long-term structural problems of underdevelopment.Ethiopia a

6、ctually began the 1990s with a clear vision of reversing the socio economic crisis of the 1980s and rapidly transforming the economy.The clear vision was nothing but the economic reforms,facilitated by the Transitional E

7、conomic Policy(TEP)which was then announced by the EPRDF(Ethiopian People's Revolutionary Democratic Front)government in November 1991.Following that policy,a three year Policy Framework Paper was also developed and agre

8、ed with the IMF and the World Bank in October 1992.The Policy Framework Paper,which forms the basis for the economic reform programme,sought to revitalize the economy and create a more market oriented econonnc system,giv

9、ing room for privatization and thereby,replacing the rigidly centralized command economy.Economic growth can be defined most simply as the ability of a nation to expand its capacity to produce the goods and services its

10、people want.If the economic growth is analyzed from this point of view,economic reforms have enhanced economic growth in Ethiopia.It can be seen,which analyses the economic performance on GDP and its components before re

11、form measures (1986/87-1991/92)and the same after the reform measures(1992/93-2003/04).That is,between 1982/83-1991/92 and 1992/93-2003/04,reveals that those economic reforms have revamped the economy by moving its GDP f

12、rom its long-standing poor record to a respectful growing state.Nevertheless,the reforms have little impact in attaining other direct economic objectives,Such as standard of living,external debt,trade balance deficit and

13、 current Account deficit.Economic reforms have,no doubt,because of price liberalization brings inflation higher than the pre-reform period and also significant amount of private investment,but its volume started declinin

14、g within the reform period and so were privatization proceeds.Following economic reform,export to import has become impressive,in spite of an increase m the total value of import which reveals that Ethiopia has really be

15、nefited from the new reform policy.Export and import variables are the direct parameters which are widely used to determine the impact of reforms in many studies.The reason is that production for exports introduces a gre

16、ater degree of competition,keeping the economy abreast of the latest technical advances and leads to a higher degree of saving and investment.Imports are important means for increasing technology,Imports also reduce cons

17、traints in the form of intermediate inputs.Access to a variety of foreign imports at a lower cost shifts the production function upwards,showing a link between productivity and trade regime.This study suggests that a ful